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Normal profit is ₹70,000 and actual average profit is ₹95,000. What is the super profit?

Answer and explanation

Correct answer: ₹25,000

The governing concept is super profit, which measures the excess of actual or maintainable average profit over normal profit. The formula is: Super Profit = Actual Average Profit − Normal Profit. Substituting the given amounts gives ₹95,000 − ₹70,000 = ₹25,000. Therefore option A is correct. Option B is merely the normal profit used as the benchmark, while option C is the complete actual average profit and not the excess over normal return. Option D incorrectly adds the two figures. Since super profit measures only the surplus earned above the normal level, subtraction—not addition or selection of either original amount—is required.

Related tags

Super-ProfitNormal-ProfitGoodwill-ValuationGoodwill-AccountingAccountancyGoodwill AccountingReconstitution Admission Of A PartnerClass 12 Mcq

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